Photo by Timothy A. Clary/AFP/Getty Images.
In addition to mounting college loans and bleak job prospects, young Americans now have something else weighing them down: the widest wealth gap ever between the young and old.
Households headed by a person 65 or older have a median net worth 47 times greater than households headed by a person under 35, according to a new analysis from the nonpartisan Pew Research Center. In dollars, that gap amounts to a median net worth of $170,494 for older households, compared to $3,662 for those under 35.
Older Americans have always historically had more money than young people, but the existing disparity has doubled since 2005. Just 25 years ago, older households held about 10 times more wealth—less than a quarter of the current gap—after adjusting for inflation.
The data also has potential political implications, particularly as the Nov. 23 deadline looms for the congressional supercommittee tasked with finding $1.2 savings over the next decade. As the Associated Press explains, the data "casts a spotlight on a government safety net that has buoyed older Americans on Social Security and Medicare amid wider cuts to education and other programs." At the same time, wealth inequality, high unemployment and growing student debt have also emerged as rallying points for Occupy Wall Street protesters in cities nationwide.
Demographers attribute some of the shift to young people marrying later, coupled with increasing numbers of young single parents. Housing is another crucial variable. A home is typically a young person’s most valuable asset, but increasing debt and falling home values during the recession have magnified a 31 percent decrease in housing wealth for those under 35 since 1984, according to the AP. During the same period, the number of people 35 and under with a net worth of zero has nearly doubled, to 37 percent.
"If this pattern continues, it will call into question one of the most basic tenets of the American Dream—the idea that each generation does better than the one that came before," Paul Taylor, director of Pew Social & Demographic Trends and co-author of the analysis, told the AP.